The year-to-date LINK/BTC chart.
Although the Bitcoin price is down more than 40% from its 2019 high, it’s still been quite a positive year for the world’s first and most popular cryptocurrency. And despite the fact that the rest of the rest of the crypto market as a whole has also had a positive year in terms of US dollar (USD) exchange rates, it’s been a historically poor year for altcoins when exchange rates are denominated in BTC.
Only two major crypto assets are up in terms of Bitcoin year-to-date.
Of course, “major” is a relative term when it comes to crypto assets. The two assets covered in this article, Binance Coin (BNB) and Chainlink (LINK), both had less than $40 million worth of real trading volume over the past 24 hours, according to Messari Crypto. By comparison, Bitcoin accounted for roughly the same amount of USD-denominated trading volume as the next ten crypto assets combined at $231 million (not counting stablecoins).
Bitcoin’s relatively high trading volumes have also stood the test of time, while altcoins can be hot one month and then disappear from everyone’s radar the next. A short term spike in an altcoin’s price and trading activity does not necessarily mean it’s here for the long haul. For example, there was a time when many cryptocurrency pundits thought Ethereum (ETH) would overtake Bitcoin (BTC) as the most valuable cryptocurrency network on the market, but ETH is down 85% against BTC since the peak of that prediction’s popularity.
With all that said, BNB and LINK are both in the top five of non-stablecoin crypto assets in terms of real trading volume, so they certainly qualify as “major” in this market.
Let’s take a closer look at the two major crypto assets outperforming the Bitcoin price in 2019.
As Charlie Custer wrote for Longhash over the summer, exchange tokens have had an excellent year, and BNB is currently the most well-known iteration of this phenomenon. BNB started out as an ERC-20 token on Ethereum before migrating to its own blockchain. Recently, Binance Chain was used as the basis for the launch of a non-custodial exchange. These types of exchanges are becoming increasingly popular and have massive security benefits.
So far this year, BNB is up 42% in BTC terms, according to TradingView. But as Paradigm’s Arjun Balaji wrote for the The Block back in February, the investment case for BNB is unclear.
For example, there is nothing about a non-custodial exchange that necessitates the creation of a new token. Arwen and Sparkswap are proof of that.
The example use cases of BNB mentioned on Binance’s website are “fueling transactions on [Binance Chain], paying for transaction fees on Binance Exchange, making in-store payments, and many more.”
In many ways, BNB appears to be nothing more than another altcoin or appcoin that would have an extremely hard time competing with Bitcoin as money. The reasons why someone should hold BNB over the long term remain unclear, as there’s no direct connection between the BNB token and the success of Binance as a platform.
If Binance decided to pay a share of trading fees out to BNB holders, the token would make a lot more sense and act more like a traditional stock. However, this would also illustrate the issues around Binance’s centralized control over BNB. Additionally, the consensus algorithm behind Binance Chain puts into question whether BNB should even be referred to as a true crypto asset.
LINK is a crypto asset I already covered earlier this year after its price increased more than 800% in a matter of months (read that previous review of LINK here). After that article was published, LINK fell from around $3.45 to a low of $1.47 on September 24th. Currently, LINK is trading around $2.61. In terms of BTC, LINK is up 269% on the year.
LINK has proven to be extremely volatile this year, so the warning included in the previous article still applies: Trading LINK may not be that dissimilar from playing the slots in a casino.
As Castle Island Ventures Partner Nic Carter explained in a recent interview, these sorts of alternative crypto assets tend to miss the point of why Bitcoin was created in the first place. There’s also the possibility that any useful features found in altcoins or appcoins will eventually find their way into Bitcoin by way of sidechains or some other mechanism.
While Bitcoin is still a speculative asset, the bull case built around its use as digital gold has some basis in reality, especially in the current global economic climate. However, these other crypto assets take that speculation to a much higher level where trading can be more accurately described as straight-up gambling for short term profits.